Average UK Solicitor Costs For Business Sale? Please Help.

[Goodfella1]

Hi all,

I'm a new member and would really appreciate some advice. I currently own a Letting Agency based in the Midlands UK. I'm not sure if this has a bearing on costs, but to give an overview it has been valued at £140 - £150,000, currently has two full time employees, plus me as a part time Manager / Owner (Sole Trader not wishing to continue an active role post sale). I do not own the shop / office / lease I am in and it is currently rented in a periodic rolling month by month lease. The business does not own any property, and my understanding is that the value lies in 'the book' / landlord portfolio that I would be selling for other agents to take on, not really the business as a whole so assume its not really a complex sale?

Anyway, my question is, what do you believe to be a reasonable cost for a Solicitor to oversee the sale of the business through to completion?? I have been given a price today, and to say I was shocked would be an understatement. In saying that, I have never bought, or indeed sold a business before so its all new to me.

Many thanks in advance, any advice much appreciated

 

[ethical PR]

I think the majority of people here would be hard pressed to come up with any sort of meaningful figure based on the information you have provided.

Why don't you get a quote from a few solicitors who specialise in this area and see what you find.

 

[Goodfella1]

Thank you for your message much appreciated. You say "based on the information provided" What other information would you deem relevant that would help people come up with a meaningful figure?

My next course of action would of course be to get more quotes. However, as the companies will likely be chosen at random (albeit specialists) as opposed to through recommendation, that does not necessarily mean they would be 'reasonable quotes', so thought I would put it out there to see what others have paid, or based on their experience what they would expect to pay. .

Thanks again

 

[Clinton]

... but to give an overview it has been valued at £140 - £150,000, ...so assume its not really a complex sale?

Er, if you understand so much about the law that you can form a judgement on whether it's complex or not, you should draw up the contract yourself.

Every case has its own unique issues, problems and questions that need to be addressed. Your lawyer's job is to protect your interests and to foresee problems in the transaction that are way outside what you could possibly anticipate. Even transactions involving no freehold are very complex. There may be earn-out or other elements to the deal you agree with the buyer and these have to be very carefully drafted. That's not to mention warranties and indemnities the typical seller accepts in the Purchase Sale Agreement. And you're transfering service agreements, not stock.

The average PSA for a "small transaction" runs into 50+ pages!

By the way, who provided the valuation you had? A business broker?

I have been given a price today...

What was the price?

 

[Goodfella1]

Hi Clinton, many thanks for your message much appreciated

Haha I certainly will not be drawing up the contract myself! . Having stated that I never bought or sold a business before, I was hoping the question mark regarding my (inexperienced) assumption would show that I was in fact asking more experienced individuals such as your self if you thought it was complex or not, rather than a statement of fact, so apologies if I could have communicated this a little better, but get your point.

Having read your post / reply, I do now totally take on board what you are saying with regards to the work a specialist solicitor would do and indeed the important role that they would play.

I have had three valuations from what I believe to be the only three specialist letting / estate agency brokers in the UK. They were all within £10k of each other with regards to value.

With regards to the price quoted from a specialist solicitor, they have quoted around £5,000 + VAT. I see from your profile that you are experienced in the purchase / sale of numerous businesses. What are your thoughts on the £5k + vat quote?

 

[Clinton]

If he's a solicitor whose competence you trust, and he's going to be advising you all through, bite his arm off.

A small mistake in the contract can cost you tens of thousands of pounds and much heartache, so I advise business owners to find a rottweiler, feed it well and keep it onside.

I have several solicitors I could suggest, of course, but I'm not here to pitch for any individual. If later you are stuck for good legal advice and want to contact me privately I'm happy to share a name or two of people I've used in the past. (No, they pay me no commission!)

I have had three valuations from what I believe to be the only three specialist letting / estate agency brokers in the UK. They were all within £10k of each other with regards to value.

I don't think highly about broker valuations, but that's a different topic.

 

[Goodfella1]

Ok well at least I know that in your opinion the fee is reasonable then. Re the Rottweiler, fair comment and great advice!

I'm planning on lining a meeting up as I have no experience with the solicitor in question and its not one that's come through recommendation ether, just a simple Google search of specialists in my area at the moment so will get a feel when we meet.

Regarding your solicitor recommendations, I might just take you up on that offer so may be in touch thank you!

Many thanks for your feedback on everything this evening, it really is much appreciated.

 

[Scott-Copywriter]

Obtain at least 3 quotes. Preferably 4 or 5.

If they all come out around a similar amount, then you can be reasonably confident that it's a fair and expected fee.

If it's figures you're after, a quick Google search should help: https://www.google.co.uk/#q=solicitor+cost+for+business+sale

However, they obviously vary significantly depending on the scope of the work.

 

[deniser]

As a rough figure I wouldn't expect to see a business sale cost under £10K in legal fees although as there is no property to dispose of it could be a bit less.

 

[Clinton]

Legal fees in lower mid market transactions (£2m - £5m) tend to cost upwards of £15K, but I wouldn't expect that kind of figure for the type of business described in the OP.